The overlooked stocks that could shine in 2026

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You can watch the video by clicking the player, listen to the podcast, or read an edited transcript below. These interviews were filmed on Tuesday, 9 December 2025.

Markets love a good story. And for most of 2025, it’s been the same story everywhere.

A handful of mega-cap stocks have driven the majority of equity market returns in the US, and a similar pattern has been evident here in Australia, where blue-chip heavyweights have dominated the spotlight.

In both jurisdictions, hundreds of profitable companies have been ignored, and that’s how overlooked stocks are born. These are not broken businesses, just forgotten ones.

Later in the year, investors started to move down the market-cap spectrum - particularly in Australia, where small-caps have caught a bid.

As leadership continues to broaden and fundamentals regain the spotlight, those ignored names can re-rate fast.

With 2026 now underway, we asked 10 leading fund managers to look beyond the obvious and share the overlooked stock they believe could surprise on the upside.

Our featured fund managers include (in order of appearance):

• James Abela - Fidelity International
• Alan Pullen - Magellan Investment Partners
• Ben Griffiths - Eley Griffiths Group
• Tim Carleton - Auscap Asset Management
• Joel Fleming - Yarra Capital Management
• Matthew Booker - Spheria Asset Management
• Steve Johnson - Forager Funds Management
• Anna Milne - Wilson Asset Management
• Arms Rosenberg - Minotaur Capital
• Dr David Allen - Plato Investment Management (written responses only - see below)

Note: We thank the fund managers listed above for sharing their stock ideas in the spirit of the Outlook Series. The managers featured in this series manage diversified portfolios and do not invest solely in the stocks listed below. This list is not, nor is it intended to be, a set of recommendations. Please do your own research and seek advice from a professional before making any investment decisions of your own. Past performance is not a reliable indicator of future returns.

Edited transcript

#1 - Pinnacle Investment Management (ASX: PNI)

James Abela: One stock that I believe is overlooked and under a lot of pressure right now, is Pinnacle. It's in private equity. It's in financial markets It's had some growth issues that the market is concerned about, but I do think that it will continue to do well. I think the market has got very concerned about that sector of private capital markets domestically and globally, but private markets and capital markets are still quite robust and there's not a lot of warning signals we have at the moment.

#2 - Adidas (ETR: ADS)

Alan Pullen: I'm going to pick Adidas here. So Adidas, as you know, the world's second-largest athletic sportswear company, particularly focused on performance running and leisurewear as well. They had a really strong product cycle. So they're actually growing revenues at about 10% year on year. And we expect that to continue with the World Cup where they're the main sponsor going into 2026. They ran into a little bit of trouble with tariffs in 2025, but the US is actually a pretty small part of their business. And that was overplayed in the share price. So it's both a good opportunity from a quality perspective, but also a valuation perspective.

#3 - Sims Limited (ASX: SGM)

Ben Griffiths: Well, I think one stock the market is overlooking is that old cycle stalwart, deep cyclical, SIMS metal, which are naturally benefiting from firming ferrous scrap prices and non-ferrous scrap prices. SIMS has been a business that successfully produces - buys, sells, and processes - scrap metal, which is important as the world grows out of its electric arc furnace footprints. But there's an interesting development and that's a small part of the business that's capturing some attention. And that's a little business called SIMS Lifecycle Solutions, which processes IT assets. It basically recycles old waste, old data centre waste, old computers. And the business is flying. It's doing particularly well at the moment. And it's interesting that DRAM chips have had a fivefold increase in price. And SIMS Metal, of course, recycles DRAM chips, and that has resulted in bolstering of that group's trading contribution. So expect that the SLS business - the SIMS Lifecycle Business - to contribute earnings about threefold the size of what they've done before. So SIMS is moving through a trough year in earnings. It had a difficult year in '24, and we think SIMS is a stock that's about to move higher and perform well.

#4 - Sonic Healthcare (ASX: SHL)

Tim Carleton: Well, as a broad sector, healthcare has been on the nose in the last year. The company that we like is actually doing a lot of things right at the moment, and that is Sonic Healthcare. They've obviously experienced a bit of a decline in the post-COVID era. They were doing a lot of the COVID testing that led to a couple of years of fantastic profits for the company. They used it to pay down debt and then make a few very sensible acquisitions. But they had a bloated cost base coming out of COVID, and it's taken some time to right-size that. From this point, we expect some pretty strong earnings growth over the next couple of years. We think you'll get good operating leverage as revenues continue to grow, and we should start to see some margin improvement for the businesses that they've bought, particularly in Europe, and they'll really start delivering on the earnings front. So it's trading on about the most attractive multiple that it has traded on for some time now, and they're pointing to double-digit earnings growth this year, and we expect similar sorts of earnings growth for the next couple of years.

#5 - Santana Minerals (ASX: SMI)

Joel Fleming: Probably sounds a little bit perverse, but it's a gold company, Santana Minerals, New Zealand. So, traditionally a really hard area to permit new mining projects. This ore body looks fantastic and the government there has certainly got a new process in place for moving these projects forward. And we think 2026 is going to be a really exciting year. If they get those approvals, then the stock is worth a lot more than it's trading at today.

#6 - Coast Entertainment Holdings  (ASX: CEH)

Matthew Booker: Coast Entertainment Holdings is the old Ardent Leisure business, and there was a tragedy probably about 10 years ago up there, and it was pretty catastrophic. There's a whole new board, whole new management team. They're doing a fantastic job in re-engineering the business. They've spent money on the theme park in terms of bringing up the safety levels, also rolling out new attractions at the theme park. But the big focus for us is the surplus property in the business, and they're going through a rezoning process now that's been expedited by the Queensland Government, and that's going to free up, we think, around 15 hectares of surplus land. The group owns about 55 hectares up there, but the theme park sits on about 30 hectares, but there's 15 free. We think that surplus land is probably worth $50-60 million and potentially more as they develop it with a partner. So there's a big story on surplus land there, but also the theme park is tracking a lot better. Attendance levels are getting back to 2016 levels, and the revenue is nearly up to 2016 levels as well. So there's an earnings growth story as that recovery in the business takes place.

#7 - Cuscal Limited (ASX: CCL)

Steve Johnson: Cuscal is the largest position in our Australian fund, so I have to say that. I don't think it's quite as missed as it was even six months ago. There are more people picking up on the story, but this is a really good quality business that I still think is underowned and undercovered in the brokerage world. It's actually a decent size market cap. So with a bit of growth, it can be one of those stocks that migrates into the indexes. And we see lots of earnings growth here over the next five years in a really safe, secure way. They've bought their biggest competitor. There's a lot of synergies to come out of that. We think the earnings are going to march up pretty much every year for the next five years, and that's going to look attractive in a market where I think that's quite hard to find.

#8 - Macquarie Group (ASX: MQG)

Anna Milne: One stock that's being overlooked, I would say, is Macquarie Group. And for good reason. For the last three years, it has continued to disappoint from an earnings perspective, downgrade after downgrade, and there are a few reasons for that. So firstly, they're very tied to capital velocity. As cash rates rose, capital markets slowed down and activity slowed. That is naturally quite negative for Macquarie Group. They were also cycling really strong earnings in their commodities business from the polar blast of a few years ago, and they were unable to get a few transactions away - key transactions with their renewables business in Europe. We believe this is changing. We're positive on the outlook for capital velocity. We believe they've undercooked the earnings, the management fees, and the performance fees in their MAM business, and we believe that there will be some transactions that get done over the coming months. In addition to that, they've just divested their public markets business that was very low returning, and the banking business is just going from strength to strength. So we look at Macquarie versus the big four banks and the relative valuations, and we just see Macquarie as being an absolute standout when you consider the earnings growth ahead, and then really being at the bottom of the cycle right now.

#9 - Cover Corporation (TYO: 5253)

Armina Rosenberg: Yes, we really like a weird, niche-y, little Japanese stock called Cover Corporation. Cover Corporation is a talent agency for VTubers. When you stream, you can stream with your camera on, your camera off, or you can use an avatar. And those who use avatars are called VTubers. It's actually one of the fastest-growing parts of streaming at the moment. And Cover Corporation has demonstrated exceptional monetisation abilities. So when you're a streamer, you go from basically making most of your money from subscriptions and donations - to when you join Cover Corp, broadening that out to things like merchandising and live events and concerts and sponsorships. I think their revenue per VTuber is something like $3 million annually. And so this year - I should mention the stock is off something like 40% - we think that's created a buying opportunity. It's going through a bit of a reinvestment year, which is why the market has overlooked it, but it's growing top-line 20-30%. Management has historically been quite conservative in terms of guidance, and I think that you'll see it emerge from being this weird, niche-y, sort of VTuber player to more of a global IP franchise.

#10 - Valeo SE (EPA: FR)

Dr David Allen: We like Valeo, the French automotive components supplier, which is positioned at the heart of the automotive transformation. The company has a strong focus on electrification, ADAS (advanced driver-assistance systems) and software-defined vehicles, placing it squarely in the path of several powerful structural trends. With a global footprint spanning China, India and North America, Valeo is not reliant on any single region for growth. Trading on a forward price-earnings multiple of just 9.9x, we believe the market is underappreciating the company’s strategic positioning and earnings potential, leaving meaningful scope for a re-rating.

What's your overlooked stock pick for 2026?

Let us know in the comments section below.